Shashi Final

WORKING CAPITAL MANAGEMENT IN DCC BANK
CHAPTER 1
INTRODUCTION
1.1 INTRODUCTION TO FINANCE
Finance is an integral part of the overall management. It draws heavily

on the related discipline and fields of the study namely economic, marketing,
production, and quantitative methods. This has laid greater emphasis on the
financial requirements of the BIS. Almost all kinds of business activities
directly or indirectly involve in the acquisition and use of the funds therefore
it is in the next context use may define “Finance the life blood of business.
A company in a light financial position will of course give more

weight tag to financial consideration and device its marketing and
production strategies in the light of financial constraints on the other hand,
management of a company, which has regular supply of funds, will be more
flexible in formulating its marketing and production policies, thus the study
of financial plays a significant role.
During the life of business enterprises, there are financial events that
receive considerable attention by concentrating discernible financial events,
discussion on finance of an enterprise funds required for running the
business are raised through a combination of direct revenue from sales, loans
from banks, sales of Securities and bonds etc., and one displayed among
completing uses within the enterprises activities.
Dr.AMBEDKAR INSTITUTE OF MANAGEMENT AND STUDIES Page 1

Definition of Business Finance:

Business finance is that part of business activity which is concerned
with the result in the acquisition of capital funds in meeting financial needs
and overall objectives of business enterprises”
1.2 FINANCIAL MANAGEMENT

Meaning of financial management:
Financial management is concerned with the management of
finance of finance function of the management. It refers to all those
managerial activities which are the concerned with the ascertainment of the
finance. Short term as well as long term needed by the firm determination of
the source suitable under the given circumstances and collections of the
funds in time and control over the utilization of the funds.
In other words, it is the part of managerial activity which is mainly
concerned with the planning and contracts of the financial resources of a
firm.
1.4 DEFINIATION OF FINANCIAL MANAGEMENT:

Financial management is concerned with the management decisions
that result in the acquisition and financing of short term and long term assets
for the firm. The analysis of this is based on the expected inflows of fund
and their effects upon managerial objectives.

1.4 IMPORTANCE OF FINANCIAL MANAGEMENT:
The management of finance is important for the following reason.
1) It helps the managements and the entrepreneurs in getting are the

problems and accomplishing their profit maximization goal.
2) Its knowledge helps in decision making in especially pertaining to

investment
3) The financial management helps in profit planning capital budgeting

controlling inventories and account receivables etc.
4) It helps firm in optimizing the out from a given input of funds.
5) It helps in allocation of coming between payments to share holders

and retained earnings.
1.5 OBJECTIVIES OF FINANCIAL MANAGEMENT:

The basic objectives of financial management are:
1. To maintenance of adequate liquid assets in the firm:

It is one of the basic objectives of Financial management . This
objective implies that financial management should insure that there
are adequate cash in hands of the firm at all times to meet its
obligations.

2. Profit maximization:
A business is a profit seeking organization. So naturally it is one of
the important objectives of the financial management. The objective
implies that financial management should ensure that the profit of the
firm as maximize.
3. Maximization of the wealth:
These days it is held by all most all the authorities on financial
management that maximization of the wealth of the firm is the most
important objective of financial management this objective implies
that financial management should ensure that wealth of the firm is
maximized.
4. To ensure maximum operational efficiency:
To ensure maximum operational through planning, directing and
controlling of the utilization of the funds i.e. through the effective
employment of funds.
1.5 DEFINIATION AND MEANING OF WORKING CAPITAL:

Working capital is defined as “the excess of current assets and
liabilities and provisions”. But as per accounting terminology, it is the
difference between the inflow and outflow of funds. In the annual survey of
industries (1961), working capital is defined to include “stocks of materials,
fuel, semi-finished goods including work in progress and finished goods and
by-products; cash represented by
a) Outstanding factory payments e.g. rent wages, interest and dividend.

b) Purchase of goods and services;

c) Short-term loans and advances and sundry debtors comprising

amounts due to the factor on account of sale of goods and services and
advances towards tax payments”
The term “working capital” is often referred to “Circulation

capital” Which changed with relative speed from one form to another i.e.,
starting from cash, changing to raw materials converting into work in
progress and finished products, sale of finished products and ending
realization of cash from debtor.
1.6 IMPORTANCE
Working capital differs from fixed capital in terms of the time
required to recover to investment in a given asset. In case of fixed capital, or
long term asset, a firm usually needs several years or more to recover the
initial investment. In contrast working capital is turned over, or circulated, at
a relatively rapid rate. Investment in firm’s normal operating cycle, when
inventories are sold and receivable are collected.
All other things being equal, the more net working capital a firm has,
the more likely that it will be able to meet current financial obligations.
Since net working capital is ability to obtain debt financing, many loan
agreement with commercial banks and other lending institution provide a
provision of the firm to maintain a minimum net working capital position
like, bond.
1.7 NEED FOR WORKING CAPITAL

The need for working capital cannot be over emphasized. Every

business needs some amount of working capital. The need for working arises
due to the time gap between production and realization of cash from sales.
There is an operating cycle involved into sales and realization of cash from
sales. There is no operating cycle involved in the sales and realization of
account. There are time gaps in purchases of raw materials and production,
sales, and realization of each. Thus, working capital needs the following
needs.
1) For the purchase of raw materials, components and spares.

2) Pay wages and salaries.
3) To incur day to day expenses and overhead counts such has fuel,
power, and office expenses.
4) To meet the serving courts of banking, advertising etc.
5) To provide credit facilities to the customers.
6) To maintain the inventories of raw materials, work-in-progress,
stores, spares and finished stock.
In case adequate working capital is not available for this period, the
company will not be in a position to purchase raw materials, pay wages and
other expenses required for manufacturing the goods to be sold.
1.8 COMPOSITION OF WORKING CAPITAL:

For proper appreciation and understanding of it, a close look at the

composition of working capital is necessary. The following are the
constituent parts of the working capital are,
CURRENT ASSTES
cash in hand and balances at bank
Bills receivables
Short term loans and advances
Marketable securities
Inventories a) Raw materials b) working in progress
c) finished goods d) stores and space
Temporary Investments of Surplus Funds

Other bank balance
Accrued income
Prepaid expenses
CURRENT LIABILITIES
Bills payables
Sundry creditor
Accounts payables
Accrued or outstanding expenses
Short term loans, advances and deposits
Dividends Payables
Banks overdrafts
Provisions for taxations
1.9 CONCEPTS OF WORKING CAPITAL:

Gross working capital:
It is the amount of funds invested in the various components of

current assets. Such has cash in hand, cash at bank, stock of finished goods,
work in progress, raw materials, accounts receivables, prepaid expenses etc.
Networking capital:
It is the difference between Current assets and Current liabilities the

concept of networking capital enables a firm to determine how much amount
is left for operational requirements.
Permanent working capital:
Permanent or fixed working capital refers to the amounts of

investments in current assets required throughout the year for carrying out
the business operation. This amount various from year to year depending up
on the growth of a company.
Temporary working capital:
Temporary variables of fluctuating working capital refer to the

amount working capital, which goes and fluctuating from time to time with
the change in the volume of business activities.
Negative working capital:

Negative, working capital emerges when current liabilities exceed

current assets, such has situation is not absolutely theoretical, and occurs
when a firm is meaning a crisis of some magnitude.
Operating cycle:
Operating cycle is the time duration required to convert sales after

the conversion of resources into inventories, into cash the time gap between
the sales and their actual realization in cash in this technically termed as
operating cycle of the business.
In cash of manufacturing company the operating cycle is the length

of time necessary to complete the following cycle of events.
 Conversion cash into raw materials.
 Conversion of raw material into working in progress.
 Conversion of working in progress into finished goods.
 Conversion of finished goods into accounts receivables.
 Conversion of accounts receivables into cash.
The cycle will be repeated again & again. The operating cycle of a
manufacturing company can be given in the following chart.
Account receivables

Cash finished
Goods
Raw materials Work in progress
1.10 DETERMINATION OF WORKING CAPITAL:
Nature of Business:
Working capital depends upon the nature of business the public
utility like railways; electricity etc. has need for large inventories and their
operations mostly on cash basis. On the other hand ordinary manufacturing
and trading firms requires sufficiently large working capital as they have to
invest to inventories receivables.
Sales of operations:
The scale of operations effects the working capital requirements of
the concern. As concern carrying on activities on a small scale needs less
working capital on the other hand a concern undertaking activities on large
scale needs large amount of working capital.
Growth and expansion of business:

The growth and expansion of a business affects the working

capital requirements, when there is growth and expansion in the business of
a firm, the working capital needs the firm will also increase.
Credit policy:
The credit policy of the firm affects its working capital requirements.
A firm allows liberal credit to its customers will require larger working
capital than a firm which follows a light credit policy.
Credit facilities enjoyed from creditors:

The credit facilities enjoyed by a firm from its creditors will also
affects the working capital requirements of a firm. A firm enjoying liberal
credit facilities from its suppliers or creditors will need lower working
capital than firm which does not enjoy liberal credit facility from its
suppliers, will need higher working capital.
Price level changes:

Price level changes also affect the working capital requirements of
the firm. In periods of raising prices of a firm which has to pay higher price
for the purchaser but cannot afford to increase the price of its products
considerably needs more working capital.
Profit level:
Profit levels also affect the working capital requirements of a concern
higher profit margins results on higher generation of internal funds and more
contribution to working capital.
Dividend policy:

The dividend policy of a company effects its working capital

requirements. Company which follows a liberal dividend policy will require
more working capital than a company which follows a strict dividend policy.
Government regulations:
Government regulations restriction affects the working capital
requirement of a firm.
Receivable turnover:
It is necessary to have an effect control of receivable. A prompt
collection of receivable and good facility for setting payable result into low
working capital requirements.
Taxes:
Taxes imposed by the government affect the working capital of a

firm higher taxes are a strain on the working capital of the firm.
Seasonal functions:
A number of industries manufacture and all sell goods only during

the certain season for e.g. the sugar industry produces the sugar during the
December and April hence the working capital requirements of this
industries will be higher during the period compare to any other period.
1.11 SOURCES OF WORKING CAPITAL:

The sources of working capital may be classified under two heads namely:
 Short term work loans for meeting the variable working requirements.
 Long term sources for meeting the personnel working capital

requirements.
Short term sources of working capital: Are as follows
1. Trade Credit:
Trade credit refers to credit obtained from the suppliers of books in

the course of trade. In other words, it means goods purchased from
suppliers on credit, the duration of trade credit is usually 15 days to 90
days. It is granted without any scrutiny except the credit standing of
the concern.
2. Bank credit:
It refers to credit, financial a common actuation or advance taken from
commercial banks. It may be taken from of cash credits/overdrafts,
loans and bills discounted of the various forms of banks credit.
Bank credit is generally given for a period not exceeding one year
bank credit may be given either on mere personal credit or security of
the borrower against the hypothecation pledge or mortgage of some
asset. An interest of 15% to 18% usually charges on bank credit or
advance.
3. Customer advances:
It refers to received by a concerned from its customers before the
delivery of goods these advances one generally for a part of the goods,
order by the customers. The period of customer advances will depend

upon the time taken to deliver the goods generally no interest is
allowed on interest is allowed on customer advances.
4. Short term public deposit:

It refers to deposits accepted by a concern from the general public
for a short period not exceeding one year they are popular with
concern which have high credit standing in the market. They are
generally obtained without offering and security to the deposits
generally on interest of 10% to 12% is allowed on these deposits.
Long term sources of working capital: Are as follows
1. Finance corporation:
In India, the term finance is available from many specialized

industrial finance corporation like the industrial finance corporation (IFC)
state finance corporation (SFC), Industrial development bank of India, etc.
2. Public deposits:
Long term public deposits refer to deposits accepted the general

public for period exceeding one year, but not exceeding three years.
A company can accept public deposits up to a maximum of 25% of its

paid capital and free reserve generally medium term public deposits are
unsecured. On interest of 15% to 18% is allowed on these deposits.
3. Redeemable debentures:

Debenture refers to loans rising by a company from the investing

public through the issue of bounds or certificates card debentures.
Redeemable debentures are on important source of long term finance for
public limited companies.
4. Redeemable preference shares:

Redeemable preference shows one of its sources of long term finance.
Often redeemable preference shares are issued by public limited companies
for rising long term finance.
5. Ploughing bank of profits or reinvestment of profits:

It refers to the creation of revenue out of profits and utilization of the
accumulated it means reinvestment of a part of the profit in the BIS. It is
internal source of finance or self finance.
.6. Equity shares:

Joint stock companies can raise long term funds through issue of
equity shares.

1.12 FACTORS INFLUENCING WORKING CAPITAL:

 Nature of business and size of business.
 Production policy.
 Seasonal variations.
 Working capital cycle.
 Rate of stock turnover
 Credit policy.
 Business cycle.
1.13 PLANING WORKING CAPITAL:

For all practical purposes of the planning of sources of working
capital can be confined to:
1) Net gains from operations.
2) Sale of fixed assets.
3) Raising long term debt.
4) Additional issue of shares.
5) Retirement of current liabilities below book value.
1.14 WORKING CAPITAL WATER TANK CONCEPT:

A)-Inflow:
 Share capital.
 Loans funds.
 Current liabilities.
 Revenue collections.

B)-Outflow:
 Taxes on profits.
 Prepayment of loans and liabilities.
 Dividends to share holders.
 Outside investment.
1.15 WORKING CAPITAL MANAGEMENT

Introduction:
The management of working capital is on integral part of overall
corporate management. Working capital management is one of the most
important aspects of financial management. It forms a major function of the
finance manager and accountant.
Management of working capital refers to the management of assets
as well as current liabilities. The major thrust of course is on the
management current assets. This is understandable because current liabilities
arise in the contexts of current assets
Meaning:
Working capital management means management or administration of
all aspects of working capital that is assets and current liabilities.
Definition:
“Working capital management concerned it the problems arise in
attempting to manage the current assets, the current liabilities and the inter
relationship that exists between them”.
Working capital is a significant facts of financial management its
important stems from two reasons;

1. Invest in current assets represents a substances portion of total

investment.
2. Investment in current assets and the level of current liabilities have to
be geared quickly to changes in sales.
1.16 OBJECTIVES OF WORKING CAPITAL MANAGEMENT:

It is basic objective to be managing the firms and working capital
(I.e., current assets and current liabilities). In such a way that a satisfactory
level of working capital (I.e., neither excessive nor in adequate working
capital list excessive or long the liquidly position of the firm would no
doubt, improve but the profitability would be adversely affected as funds
would remained idle, conversely, if the working capital is too small, the
profitability of the firm may improve, but the liquidity position of the firm
would be adversely affected.
Different aspects of working capital:
Working capital management
Cash management inventory

Management
Management of account receivable

Different aspects of working capital management are as follows:

1. Cash management:
Meaning:
It has such an amount of cash which is neither more nor less but is
sufficient to meet its requirements ensuring of the provisions of adequate
cash to all the sections of the organization and also ensuring that cash is not
held idle is called as cash management.
Reasons for holding cash:

1. Transaction Motive.
2. Precautionary or contingency motive.
3. Compensation motive.
Objectives of cash management are as follows:

1. To meet the cash payments as per the payment schedule.
2. To minimize the amount locked up as cash balance.
Basic problems involved in cash management:

1. Controlling the level of cash balance.
2. Controlling the inflows of cash.
3. Controlling the out flows of cash.
1. Controlling the level of cash balance.
Controlling is one of the basic objective of cash management is to
minimize the level of cash balance. It means ensuring that the level of cash
balance is neither excessive nor inadequate.

2. Controlling the inflows of cash:

Its main objective is the prevention of cash by the employee and the
increasing of cash inflow particularly through the speedy collection of cash
from customers.
The controlling of inflows of cash can be done through of techniques such

as:
a) Proper system of internal check.
b) Concentration banking.
c) Increasing the cash sales.
d) Lock box system.
3. Controlling the outflows of cash:

Its main objective is slowing down the disbursements or
payments as cash for as possible.
A firm can effectively control the out flows of cash through following
measures.
A) Centralized system of disbursements of & payments.
B) Payments only on due dates.
C) Delaying the salary.
Management of account receivables:
Meaning:
It is the process of making such divisions on investments on account
receivables which will results in maximum returns to the firm and also it
means the maintaining of accounts receivables at the optimum level.

Determinants of accounts receivables:

 Credit sales volume.
 Credit policies.
 Business terms.
 Competition.
 Location.
 New products.
Tools for controlling of accounts receivables:
The important tools for Controlling of accounts receivable are.
 Formation of suitable credit and collect on policies.
 Competition of debtor turnover ratio and average collection period.
 Preparation of aging schedule of accounts receivables.
Management of inventory:
Meaning:
Inventory management involves the development and
administration of policies system and procedures which will minimize total
cost relative to inventory decisions and rebated functions such as customer
service requirements, production scheduling, traffic etc.
Importance of inventory control:

Inventory constitute as significant portion of the assets of many
business understandings the bulk of working capital is locked up in
inventories. Inventories account for more than 50% of the total investment
on current asset. So inventory management or control has acquired great
significant particularly in the management of working capital.
Objectives of inventory management:

Certain objectives of inventory control are.
1. To keep the investment in inventory as well as possible.
2. T ensure effective utilization of shortage capacity or space
3. To have effective control over purchase, storage and use of materials.
The most commonly used inventory control techniques are as following:

1. Always better control (ABC) analysis.
2. High medium and low (HML) classification.
3. Fast moving, slow moving and non moving (FSM) classification.
4. Vital, essential and desirable (VED) classification.
5. Economic order quantity (EOQ)
6. Two bin system.
7. Materials requirements planning (MRP)
8. Just in time (JIT)
9. Perpetual inventory system.
10. Periodical evaluation.

RESEARCH DESIGN
2.1TITLE OF THE STUDY:

“A STUDY ON WORKING CAPITAL MANAGEMENT IN KOLAR
DISTRICT CENTRAL CO-OPERATIVE BANK”
2.2 STATEMENT OF PROBLEM:

The statement of the problem under study is an evaluative
study on “WORKING CAPITAL MANAGEMENT IN KOLAR
DISTRICT CENTRAL CO-OPERATIVE BANK”. Working capital
analysis depends to a larger extent on the study of each asset by calculating
ratios, preparing fund flow statement etc. these techniques helps us in
scientific decision making process or in deciding the efficiency in utilizing
working capital.
2.3 OBJECTIVES OF THE STUDY:

Objectives of this study are as follows.
1. To study the working capital management in Kolar DCC Bank.
2. To study the management of cash, inventories, and receivables.
3. To analyze the trend of working capital.
4. To know what role working capital is playing in the Kolar DCC Bank.
5. To offer constructive suggestions.

2.4 SCOPE OF THE STUDY:

The study covers certain key factors affecting finance of the entire
bank. This study is concerned with working capital management with the
help of financial statements by using various techniques. Working capital
management has its own importance in banks as it will be more of
service rendering institutions rather than of profit oriented units and so it
has to minimize its costs incurred on various activities undertaken in the
bank.
OPERATIONAL DEFINITIONS OF CONCEPTS:

Working Capital:
In accounting ‘Working capital is the differences between the inflow

and outflow of funds. In other words, it is the net cash inflow. It is
defined as the excess of current Assets over current liability &
provisions.
In annual survey of industries (1961), Working capital is defined to
include “stocks of materials, fuel, semi-finished goods including
working progress & finished goods & by products.
Current Assets:
Current assets are those assets which in the ordinary course of
business can be converted to cash within a short period of normally
one accounting year.

Current liability:
Current liabilities are those liabilities which are intended to be paid in

the ordinary course of business with is a short period of normally one
accounting year out of the current assets or the income of the business.
2.7 SAMPLING:
Collection of data is made from Bank Audit Reports and Bye
Law and personal interview.
2.8 RESEARCH METHODOLOGY:

The method of research adapted to carry out this project work is
“Historical Research”. It is mainly through audit report and personal
interview with the accounts manager. The study comprise of the bank’s
operation and the technique followed by them. The data extracted from the
annual reports of the company was analyzed inferred and further to tables.
To make it pictorial and easier to grasp or understand the data was
represented in graphical form.
2.9 TOOLS USED FOR DATA COLLECTION:

SOURCES OF DATA:
Sources of data may be classified into:
a. Primary data.
b. Secondary data.

PRIMARY DATA:
The primary data are those which have been collected by the research
directly. Such data are considered to be original in character.
 .Personal Interview
SECONDARY DATA:
SORCES OF SECONDARY DATA:
The secondary data are those, which have been collected and compiled
for another purpose. Generally speaking secondary data information is
something that has been previously published by some organization
booklets, magazines, or other journals and periodicals. The secondary data
are cheaper than primary data but they can also be obtained more quickly.
 Books on Financial management.

 Website
2.10 REFERENCE PERIOD:

The time period of study for 30 days. It includes the time together
resources of information, material, formulate and analysis.
2.11 PLAN OF ANALYSIS:

The study is concerned with Working Capital Management of Kolar
DCC Bank through the use of some accounting techniques based on the past
three year’s balance sheet of the Bank. Balance sheet, P& L account, Ratios,
Tables and graphs are used for the study.

2.12 LIMITATIONS OF THE STUDY:
1. This report is based on the annual reports, which are provided by the
company. Thus, the accuracy of the study depends upon the accuracy
of the annual reports.
2. As working capital is a financial aspect certain matters are kept
confidential.
3. Time was major limiting picture to the study.
4. Arriving at a conclusion was very difficult as there were too many
factors to be considered, as the topic is very vast.
5. As it is a rural based bank it will have limited sources of working
capital.

2.13 CHAPTER SCHEME:

The following is the format of this dissertation report
CHAPTER.1: INTRODUCTION.
This chapter includes the theoretical background of the study.
CHAPTER.2: RESEARCH DESIGN.

This chapter includes the title of the study, statement of the
problem, objectives of the study, Hypothesis, optional definitions, Sampling,
Methodology and plan Analysis, Sources of Data, Reference period and
Limitations.
CHAPTER.3: COMPANY PROFILE

This chapter includes Nature and type of business, Board of directors,
organizational chart, Functional chart, and Future prospects/Growth of the
company.
CHAPTER.4: DATA ANALYSIS AND INTERPRETATION

This chapter includes, Title of the table, Data table in figures,
Graphical Representation of data.
CHAPTER.5: SUMMARY OF FINDINGS AND CONCLUSIONS

This chapter contains the summary of findings arrived at the analyzing
and analysis of data.

CHAPTER.6: SUGGESTIONS
This chapter includes the specific Recommendation / Suggestion to
each of the objectives of the study.
CHAPTER.7: APPENDICES AND ANNEXURES.

This chapter includes the useful material collected from the
organization are annexed.
CHAPTER.8: BIBLIOGRAPHY.
This chapter includes the reference made from Text books, Journals,
news papers, and Magazines are listed.

CHAPTER-3
COMPANY PROFILE
BRIEF HISTORY:
The very first state deposit bank, Banco di San Giorgio (Bank of St.
George), was founded in 1407 at Genoa, Italy. The name bank derives from
the Italian word Banco “desk / bench”, used during the Renaissance by
Jewish Florentine traces of banking activity even in ancient times.
In fact, the word traces its origins back to the Ancient Roman Empire,
where money lenders would set up their stalls in the middle of enclosed
court yards called macella on a long bench called a bancu, from which the
words banco and bank are derived. As a moneychanger, the merchant at the
bancu did not so much invest money as merely convert the foreign currency
into the only legal tender in Rome-that of the imperial mint.
The earliest evidence of money-changing activity in depicted on a

silver drachm coin from ancient Hellenic colony Trapezes on the Black Sea,
modern Trabzon, c.350-325BC, presented in the British museum in London.
The coin shows a banker’s table (trapeze) laden with coins, a pun on the
name of the city.

A Bank is a financial institution that accepts deposits and channels

those deposits into lending activities. Bank primarily provides financial
services to customers while enriching investors. Government restrictions on
financial activities by banks vary over time and location. Banks are
important players in financial markets and offer services such as investment
funds and loans. In some countries such as Germany, banks have historically
owned major stakes in industrial corporations while in other countries such
as the United States banks are prohibited from owning non-financial
companies. In France banc assurance is prevalent, as most banks offer
insurance services (and now real estate services) to their clients.
The level of government regulation of the banking industry varies

widely, with countries such as Iceland, having relatively light regulation of
the banking sector, and countries such as China having a wide variety of
regulations but no systematic process that can be followed typical of a
Communist system.
CO-OPERATIVE BANKING:
Co-operative banking is retail and commercial banking organized on a
co-operative basis. Co-operative banking institutions take deposits and lend
money in most parts of the world.
Co-operative banking includes retail banking, as carried out by credit

unions, mutual savings and loan associations, building societies and co-
operatives, as well as commercial banking services provided by mutual
organizations to co-operative businesses.

Central Bank, whose legal name is Central Co-operative Bank, was

founded in 1915 as a Massachusetts chartered cooperative bank to provide
savings deposits and originate mortgage loans.
Between 1970 and 1982, the Bank grew through mergers with 6 other
Massachusetts co-operative bank.
In October 1986, Central Bank became a public company by

converting to a capital stock Co-operative bank.
In 1994, Central bank acquired Metro Bancorp, Inc., the parent

company of Metropolitan Bank and Trust Company.
In 1999, Central Bancorp, Inc. became the holding company for

Central Bank. Central Bank is a full- service community banking operation
that provides a variety of deposit and lending services-including savings and
checking accounts for retail and business customers, mortgage loans for
constructing, purchasing and financing residential and commercial
properties, and loans for education, home improvement and other purposes.
The bank operates 9 full-service offices in the Massachusetts

communities of Somerville, Arlington, Burlington, Chestnut Hill, Malden,
Medford, Melrose and Woburn (two branches). The Bank also operates a
branch at Woburn High School that is available only for faculty, staff and
students of the school, and a stand alone 24hours automated teller machine
in Somerville.

CO-OPERATIVE BANK:
A Co-operative Bank is a financial entity which belongs to its

members, who are at the same time the owners and the customers of their
bank. Co-operative banks are often created by persons belonging to the same
local or professional community or sharing a common interest. Co-operative
Banks generally provide their members with a wide range of banking and
financial services. Co-operative banks differ from stock holder banks by
their organization, their goals, their values and their governance. In most
countries, they are supervised and controlled by banking authorities and
have to respect prudential banking regulations, which put them at a level
playing field with stockholder banks. Depending on countries, this control
and supervision can be implemented directly by state entities or delegated to
a co-operative federation or central body. Even if their organizational rules
can vary according to their respective national legislations, co-operative
banks share common features:
 Customer-owned entities: in a co-operative bank, the needs of the

customers meet the needs of the owners, as co-operative bank members are
both. As a consequence, the first aim of a co-operative bank is not to
maximize profit but to provide the best possible products and services to its
members. Some co-operative banks only operate with their members but
most of them also admit non-member clients to benefit from their banking
and financial services.

 Democratic member control: co-operative banks are owned and

controlled by their members, who democratically elect the board of
directors. Members usually have equal voting rights, according to the co-
operative principle of “one person, one vote”.
 Profit allocation: in a co-operative bank, a significant part of the

yearly profit, benefits or surplus is usually allocated to constitute reserves. A
part of this profit can also be distributed to the co-operative members, with
legal or statutory limitations in most cases. Profit is usually allocated to
members either through a patronage dividend, which is related to the use of
the co-operative’s products and services by each member.
Co-operative banks are deeply rooted inside local areas and

communities. They are involved in local development and contribute to the
sustainable development of their communities, as their members and
management board usually belong to the communities in which they
exercise their activities. By increasing banking access in areas or markets
where other banks are less present-SME, farmers in rural areas, middle or
low income households in urban areas – co-operative banks reduce banking
exclusion and foster the economic ability of millions of people. They play an
influential role on the economic growth in the countries in which they work
in and increase the efficiency of the international financial system. Their
specific form of enterprise, relying on the above-mentioned principles of
organization, has proven successful both in developed and even developing
countries.

Main Article: Credit Union
Credit unions have the purpose of promoting thrift, providing credit at

reasonable rates, and providing other financial services to its members.
Credit union members are usually required to share common bond,

such as locality, employer, religion or profession. Credit unions are usually
funded entirely by member deposits, and avoid outside borrowing. They are
typically (though not exclusively) the smaller form of co-operative banking
institution. In some countries they are restricted to providing only unsecured
personal loans, whereas in others, they can provide business loans to
farmers, and mortgages.
Co-operative banks:
Larger institutions are often called co-operative banks. Some of

these banks are tightly integrated federations of credit unions, though those
member credit unions may not subscribe to all 9 of the strict principles of the
World Council of Credit Unions (WOCCU).
Like credit unions, co-operative banks are owned by their

customers and follow the co-operative principle of one person, one vote.
Unlike credit unions, however, co-operative banks are often regulated under
both banking and co-operative legislation. They provide services such as
savings and loans to non members as well as to members and some
participate in the wholesale markets for bonds, money and even equities.

Many co-operative banks are traded on public stock markets, with the
result that they are partly owned by non members. Member control is diluted
by these outside stakes, so they may be regarded as semi-cooperative.
Co-operative banking systems are usually more integrated than credit

union systems. Local branches of co-operative banks elect their own boards
of directors and manage their own operations, but most strategic decisions
require approval from a central office. Credit unions usually retain strategic
decision-making at a local level, though they share back-office functions,
such as access to the global payments system, by federating.
Some co-operative banks are criticized for dilution of co-operative

principles. Principles 2-4 of the Statement on the Co-operative Identity can
be interpreted to require that members must control both the governance
system and capital of their co-operatives. A co-operative bank that raises
capital on public stock markets creates a second class of share holders who
complete with the members for control. In some circumstances, the members
may lose control. This effectively means that the bank ceases to be a co-
operative. Accepting deposits from non-members may also lead to a dilution
of member control.
Building societies:
Building societies exist in Britain, Ireland and Common wealth

countries. They are similar to credit unions in organization, though few
enforce a common bond. However, rather than promoting thrift and
offering unsecured and business loans, their purpose is to provide home
mortgages for members. Borrowers and depositors are society members,

setting policy and appointing directors on a one member one vote basis.
Building societies often provide other retail banking services, such as
current accounts, credit cards and personal loans. In the United Kingdom,
regulations permit up to half of their lending to be funded by debt to non-
members, allowing societies to access wholesale bond and money markets
to fund mortgages. The worlds largest is Britain’s Nationwide Building
Society.
Others:
Mutual savings bank and mutual savings and loan associations were
very common in the 19th and 20th centuries, but declined in number and
market share in the late 20th century, becoming globally less significant than
co-operative banks, building societies and credit unions. Trustee savings
banks are similar to other savings banks, but they are not co-operatives, as
they are controlled by trustees, rather than their depositors.
India:
The origins of co-operative banks in India can be traced to the close

of the 19th century when inspired by the success of the experiments related to
the co-operative movement in Britain and the co-operative credit movements
in Germany. Such societies when set-up in India co-operative banks is an
important constituent of Indian financial system. They are the primary
financiers of agricultural activities, some small scale industries and self
employed workers. The Anyonya co-operative bank in India is considered to
have been first co-operative bank in Asia.

Growth Prospects of Kolar DCC Bank:
The Kolar DCC Bank was established on 24.12.1954, according to

No: ARK492 it was registered. Its administrative limits spread in 11 taluks
In Kolar district. It started its operations successfully from 14.1.1955. It was
established with an objective of lending money and there by extending
economic support to farmers. It was basically started as service co-operative
society. And later on it was converted into Vyavasaya Seva Sahakara Sangha
Niyamita (VSSSN) which included 8-10 villages. As Kolar is famous for
sericulture activity it got expanded as Sericulture cum Farmer Service Co-op
Society (SFSCS) by which it started lending to both farmers and
sericulturalists and also it included dairy farming. In later days according to
the “Karnataka Co-operative Society Act-1959” it was converted as District
Co-operative Bank in each district of Karnataka. And now it functions as
three tire structure.
PACS
DCCB
Apex Bank

Introduction;
The bank was established on 24/12/1954. According to A.R.K no: 492 it

was registered & its administrative limit spread in 11 taluks of Kolar
district. It started its operation successfully from 14/ 1/1955. Basically it was
started as Service Co-operative Society for few villages only and later on it
was converted as V.S.S.N which included 8-10 villages then it got expanded
as Sericulture cum Farmer Co-operative Society by which it started lending
to both Seri culturists and farmers. In later days according to Karnataka Co-
operative Society Act 1959, it started as District Central Co-operative Bank
in each districts of Karnataka.
Now Kolar D.C.C Bank is working as Three Tier Structure, in which

Karnataka Apex Bank is considered as Mother Bank as the maximum funds
are raised from this bank for the purpose of lending. And the Apex Bank will
raise its fund from NABARD. Finally all this funds will be reaching to the
farmers with the help of Primary Agricultural Co-operative Society (PACS)
through D.C.C Bank.
PACS
DCC BANK
APEX BANK
Branches;
Kolar District Central Co-operative Bank has 12 branches, they are:
 Bangarpet
 Bagepalli
 Chikkaballapur
 Chintamani
 Gowribidnur
 Gudibanda
 K.G.F
 Kolar
 Mulbagal
 Malur
 Srinivaspur
 Sidlaghatta

Type of Bank:
Kolar D.C.C Bank is a service oriented institution which mainly focuses

on extending economic strength to farmers, who are considered as back bone
of the Nation.
Nature of bank;
Nature of Kolar D.C.C Bank is Secondary Institution as it will depend

mostly on the man power in order to carry out different activities in the
banking process.
Mission
As it is a bank it is known to all that the main mission of it will be obviously
accepting the deposits and lending it to its customers, as and when the
depositors demand for their money giving back to them.
Vision:
The current vision of the bank is to increase the deposits, issue the crop
loans, providing cash credit loans, increasing the present share investment,
provide medium term loans, non-agricultural loans, and the most important
may be collecting back the loan amounts given to the customers.

Goals and Objectives:

The Kolar D.C.C Bank has number of objectives, some of them are:
 Undertaking common banking activity.

 Lending money and there by extending economic
support to farmers.
 Giving loans to the depositors by keeping their deposits
as security.
 Bank will provide safe deposit vault and lockers to both
its members and others for rent.
 Establishing branches of the bank, extension counters
and other offices and undertaking all banking activities
with the permission of Regulators of the Bank.
 Encouraging Vikas Voluntary Vahini Clubs.
 Encouraging and taking steps to provide loans to the self
help groups which are under the limits of bank.
 Creating funds in order to facilitate or help their staff
members and their dependents.
 To under take and execute trust.
 Under taking International Exchange business with the
permission of Indian Reserve Bank.
 Taking measures to help Co-operative education.
 Undertaking and encouraging co-operative research and
development activities.

 Providing training facilities to its employees, member

co-operative society about banking and managing
activities.
 To buy fixed assets for the own use of the Bank with the
permission of the Department when ever needed.
Work force Strength

All the activities of Kolar District Central Co-operative Bank are carried
out by totally 63 members, who include 4 Junior Managers, 11 First
Divisional Assistants, 38 Second Divisional Assistants, 3 Drivers and 7
Attainders to execute various activities. Man power is considered to be
important power in the Bank because each and every activity in the Bank has
to be carried out by men itself and without their efforts none of the
operations can be done.

Service Profile:
The Bank renders number of services that can be classified into 2 types,
they are:
1. Agricultural Loans :
Under this, Bank will provide loans for agricultural purposes, such as
Long Term, Medium Terms and Short Term Loans under different schemes.
All these loans are given to the farmers only after making a study on various
aspects like the area of land that the farmer has, the ability of the farmer to
re-pay the loan etc.,.
2. Non-Agricultural Loans:
These loans include different forms of schemes, they are:
a. Loans on Gold Ornaments:
These loans are provided through some branches of the Bank like
Gudibanda, K.G.F, Malur and Bangarpet. This is a package of program that
they have undertaken to provide loans to needy people at comparatively at
very low percentage.
b. Housing Loan:
In this constantly improving society every man desires to build their own
house. As they are not able to fulfill this dream they are opting for loans at a
low rate of interest which is provided by this Bank.
c. Loans for Self Helping Groups:

In the year 2009-10 Bank is providing loans to these groups to establish
100 groups newly and among already existing group’s 60 groups are
considered to be worth to give loans.

d. Yashaswini Health Insurance Scheme:

The Bank is rendering its services by registering member farmers of the
society under this scheme in order to make them obtain the complete service
provided by the Government of Karnataka.
Though the bank was initially concentrating on farmers it is now

broadened its services by considering sericulture, dairy farmers, merchants,
small scale industries and women to provide economic strength to them.
Sources of Funds:
I. Shares, Entrance fee, Share Price.
II. Deposits
III. D.C.C Bank is obtaining funds from Government of Karnataka,
Government of India according to the Law of India.
IV. Gifts, Provident and Donations.
V. Interest on the deposits.
VI. Commission.
VII. Yearly Subscription.
VIII. Help from different Governments or self help groups and
National and International Agencies will be taken.
Profitability Profile:
In the year 2016-14 the Bank has earned profits but still due to losses
that were incurred during the year 2014-15 & 2015-16 it is undergoing the
situation of accumulated losses.

Organizational Structure:
Special officer DCC Bank
Managing Director
General Manager
Managers
Senior Assistants
Junior Assistants
Competitors:
i. Pragathi Gramina Bank

ii. State Bank of Mysore
iii. State Bank of India
iv. Canara Bank
v. AXIS Bank

CHAPTER-4
DATA ANALYSIS AND INTERPRETATION
Analysis is the process of critically examining in detail accounting

information given in the financial statements. For the purpose of analysis
individual items are studied, their inter relationship with other related figures
established, the data is sometimes re-arranged to have better understanding
of the information with the help of different techniques or tools for the
purpose.
In the words of MYER “ Financial Statements Analysis is largely a

study of relationship among the various financial factors in a business as
disclosed by a single set of statements and a study of the trend of these
factors as shown in a series of statements.” The analysis of financial
statements thus refers to the information contained in the Financial
Statements in a way so as to afford a full diagnosis of the profitability and
financial position of the firm concerned.
Meaning of Analysis:
Analysis and analysis are closely related. Analysis is not possible

without analysis and without analysis has no value. Various accounts
balances appear in the financial statements.

CURRENT ASSETS:
Current assets are either cash in hand and at bank or shortly
convertible into cash.
TABLE-1
1. TABLE SHOWING CURRENT ASSETS OF BANK
Particulars 2014 2015 2016
Cash in hand / 495.82 217.1 1260.17

bank balance
Loans and 5275.88 11744.77 18420.21

advances
Other current 797.46 1456.88 2935.1

assets
money at call & 3497.75 1959.04 2871.75

short notice
TOTAL
CURRENT
ASSETS 10066.91 15377.79 25487.23
ANALYSIS:
The Current Assets has been increased from year to year. In the year
2014, 2015 and 2016 the amounts are 10066.91, 15377.79 and 25487.23
respectively.

CHART-1
CHART SHOWING CURRENT ASSETS
INTERPRETATION:
The Current Assets has been increased from 2014-2015 and 2015-16 at a
percentage of 65.46396 and 53.68781 without any reduction in the value.

Current Liabilities:
Current liabilities are intended to be paid within one year through the
sale of current assets or earnings of the concern. It includes:
TABLE-2
2. TABLE SHOWING CURRENT LIABIITIES
(Rs in Lakhs)
2014 2015 2016
Particulars
Reserves & surplus 280.25 314.37 711.56
LOANS/borrowing 2678.18 4500 13139.87
Current Liabilities
and provisions 1104.83 1491.14 2441.18
Total Liabilities 4063.26 6305.51 16292.61
ANALYSIS:
Current Liabilities has been increased at a percentage of and

CHART-2
CHART SHOWING CURRENT LIABILITIES OF BANK
INTERPRETATION:
The Bank has sufficient Current Assets to meet the obligation of

Current Liabilities.

Working Capital:
The working capital of a business is the excess of current assets over
current liabilities; this is computed by subtracting current liabilities from the
current assets. The resulting working capital figure is taken as one of the
primary indications of the short term solvency of the business.
Working Capital = Current Asset – Current Liability
TABLE-3
TABLE SHOWING WORKING CAPITAL POSITION
(Rs in Lakhs)
Particulars Current Assets Current Working Capital
Liabilities
2014 10066.91 4063.26 6003.65
2015 15377.79 6305.51 9072.28
2016 25444.7 16292.61 9152.09
ANALYSIS:
The Net Working Capital has been decreased by 11.4% in the year
2014, even in the year 2016 it has been decreased by 5.18%.

CHART-3
CHART SHOWING WORKING CAPITAL POSITION
INTERPRETATION:
The chart shows that the performance regarding the Working Capital
of the Bank is not satisfactory where it has been continuously decreasing
from year to year.

Current Ratio:
Current ratio is sometime referred to as working capital ratio or

banker’s ratio. It expresses the relationship of current assets to current
liabilities. It is widely used as a broad indicator of a company’s liquidity and
short term debt paying ability.
Current Ratio = Current assets
Current Liabilities
TABLE-4
TABLE SHOWING CURRENT RATIO
(Rs in Lakhs)
Particulars Current Assets Current Current Ratio
Liabilities
2014 10066.91 4063.26 2.477545124
2015 15377.79 6305.51 2.438786078
2016 25444.7 16292.61 1.561732589
ANALYSIS:
Current Ratio is satisfactory in the year 2014-12 and 2009-10, but it is not
satisfying the idle ratio (2:1) in the year 2015-13.
CHART-4

CHART SHOWING CURRENT RATIO
INTERPRETATION :
The Bank is performing with the low rate of Current assets against the
Current Liabilities where the short term solvency position of the Bank is not
satisfactory.

Quick Ratio:
The current ratio is generally used to evaluate an enterprise’s over all
short term solvency or liquidity position. The current ratio does not take into
account the make-up or composition of current asset. For example a Rupee
of cash or Debtor is considered more readily available to meet obligations
than a rupee of inventory. The Quick ratio is designed to over come this by
relating the most liquid assets to current liabilities.
Liquid Assets
Quick ratio =
Current Liability
TABLE-5
TABLE SHOWING QUICK RATIO:
(Rs in Lakhs)
Particulars Quick assets Current Liabilities Quick Ratio
2014 3993.57 4063.26 0.982848747
2015 2176.14 6305.51 0.345117207
2013 4131.92 16292.61 0.253607003
ANALYSIS:
The Quick Ratio is more than the idle ratio fixed by the experts; it
should be consumed to the idle ratio.
CHART-5
CHART SHOWING QUICK RATIO

INTERPRETATION:
Though the Quick Ratio is more than the idle ratio (1:1), it is
operating its activity in a safer manner and so it is satisfactory also.

Cash Ratio:
Liquidity of a firm can be viewed from an extremely conservative

point of view and a short term liquidity of a company may be measured
through cash ratio. The cash ratio relates cash and marketable securities to
current liabilities. Short term liquidity of a company may be measured
through cash ratio
Cash Ratio = Cash + Marketable Securities
Current Liabilities

TABLE – 6
TABLE SHOWING CASH RATIO
(Rs in Lakhs)
Particulars Cash Current Cash Ratio
Liabilities
2014 495.82 4063.26 0.122025172
2015 217.1 6305.51 0.034430205
2016 1260.17 16292.61 0.07734611
ANALYSIS:
The Cash position of the Bank is not sufficient to Re-pay the Current
Liabilities.

CHART-6
CHART SHOWING CASH RATIO
INTERPRETATION:
In the year 2010-11 the Cash has been increased by 4755.08 and in the
year 2014-12 it has been decreased by 5522.87 and in the year 2015-13 it
has been decreased by 5977.56.

NET PROFIT TO WORKING FUND RATIO:

The Net Profit to Working Funds Ratio is the ratio which indicates the
relationship between net profit and working funds. It shows the return on
funds employed.
Net Profit
Net Profit to Working = x 100
Fund Ratio Working Funds
TABLE-7
TABLE SHOWING NET PROFIT TO WORKING FUNDS RATIO
(Rs in Lakhs)
Particulars Net Profit Working Funds Net Profit to
Working Funds
ratio
2014 -44.38 6159.46 -0.007205177
2015 3.67 9673.09 0.000379403
2016 387.58 9908.71 0.039115082
ANALYSIS:
The above table shows the relationship between Net Profit and Working
Fund. The ratio has been increased in the year 2016 by 3.26%.
CHART-7
CHART SHOWING NET PROFIT TO WORKING FUNDS RATIO:

INTERPRETATION :
The above chart shows decrease in the ratio in the year 2014 and 2015 due to
accumulated losses. But in the year 2016 it has been increased by 3.26%.

otal Income to Working Funds Ratio:

Total Income to Working Funds Ratio is the ratio between the total
income and working funds. It indicates the income earned on the funds
employed.
Total Income to Total income
Working Funds = X 100
Ratios Working Funds

TABLE-8
TABLE SHOWING TOTAL INCOME TO WORKING FUNDS RATIO
(Rs in Lakhs)
Particulars Net INCOME Working Funds Net INCOME
to Working
Funds ratio
2014 1002.16 6159.46 0.162702575
2015 1346.25 9673.09 0.139174762
2016 2808.29 9908.71 0.283416307
ANALYSIS:
The above table shows the relationship between Total incomes to
Working Fund. The ratio has got increased from year to year i.e. in 2014,
2015 and 2016 the ratios were 14.33, 27.45 and 33.67 respectively.

CHART-8
CHART SHOWING TOTAL INCOME TO WORKING FUNDS
RATIO
INTERPRETATION :
The above chart shows the constant increase in all the years. The
increase may be due to efficient use of the working fund in the bank.

INTEREST INCOME TO WORKING FUNDS RATIO:

Interest income to Working funds ratio refers to the ratio which
indicates the relationship between the interest incomes and Working funds. It
indicates the yield on the funds used through interest earned.
Interest Income
Interest Income to = X 100
Working Funds Working Funds
TABLE-9
TABLE SHOWING INTEREST INCOME TO WORKING FUNDS
RATIO
(Rs in Lakhs)
Particulars INTREST Working Funds INREST
INCOME INCOME to
Working
Funds ratio
2014 899.56 6159.46 0.14604527
2015 925.72 9673.09 0.095700547
2016 1077.03 9908.71 0.108695279
ANALYSIS:
The above table shows the relationship between interest income and
working funds. In the year 2014 the ratio is 14.21, but it was decreased in
the year 2015 by 5.15 which was recovered in the year 2016 by getting the
percentage of 13.58.

CHART-9
CHART SHOWING INTEREST INCOME TO WORKING FUND
RATIO
INTERPRETATION :
The above chart shows the fluctuating ratios of three years which may
bee due to ineffective action plan adopted.
Current Deposits to Total Deposits Ratio:

Current deposit to deposits ratio is the ratio, which indicates the share
of current deposits in he total deposits.
Current Deposits to Current Deposits

Total Deposits = x 100
Ratio Total Deposits
TABLE-10
TABLE SHOWING CURRENT DEPPOSITS TO TOTAL DEPOSITS
RATIO
(Rs in Lakhs)
Particulars Current Deposits Total Deposits Current
Deposits to
Total Deposits
Ratios
2014 1131.77 7377.81 0.15340189
2015 1620.13 8745.2 0.185259342
2016 2128.41 9585.4 0.222047072
ANALYSIS:
The above table shows the relationship between Current Deposit and
Total Deposit. The ratios are increased from year to year. In the year 2014,
2015 and 2016 the ratios are 4.31%, 4.35% and 4.68% respectively.

CHART-10
CHART SHOWING CURRENT DEPOSITS TO TOTAL DEPOSITS
RATIO
INTERPRETATION :
As the bank has adopted a very good action plan the current deposits
to total deposits ratio.
Savings Deposits to Total Deposits Ratio:

Savings deposits to Total Deposits Ratio are the ratio which indicates
the share of savings deposit in the total deposit.
Savings Deposit to Savings Deposits

Total Deposit = x 100
Ratio Total Deposits
TABLE-11
TABLE SHOWING SAVINGS DEPOSITS TO TOTAL DEPOSITS
RATIO
(Rs in Lakhs)
Particulars SAVING Total Deposits SAVING
Deposits Deposits to
Total Deposits
Ratio
2014 2556.77 7377.81 0.346548637
2015 3011.02 8745.2 0.344305448
2016 4177.15 9585.4 0.435782544
ANALYSIS:
The above table shows the relationship between Savings Deposit and
Total Deposit. In this table the ratio is varying constantly i.e. in year 2014 it
was 29.06%, it got increased in 2015 which was 33.29% and again in 2016 it
got down to 29.90%.
CHART-11
CHART SHOWING SAVINGS DEPOSIT TO TOTAL DEPOSIT
RATIO

INTERPRETATION:
The above chart shows increase and decrease in the ratio between savings
deposit and total deposit which may be due to improper schemes provided
by the Bank.
Non-Interest Income to Working Funds Ratio:

Non-Interest Income to Working Funds Ratio is the relationship
between the Non-Income and Working Funds.
Non-Interest Income Non-Interest Income

To Working Funds = X 100

Ratio Working Funds
TABLE-12
TABLE SHOWING NON-INTEREST INCOME TO WORKING
FUNDS RATIO
(Rs in Lakhs)
Particulars NON INREST Working Funds NON
ITEMS INREST
INCOME to
Working
Funds ratio
2014 345.99 6159.46 0.056172132
2015 420.52 9673.09 0.043473182
2016 1731.26 9908.71 0.174721028
ANALYSIS:
The above table shows the relationship of Non-Interest Income and Working
Funds. In the years 2014, 2015 and 2016 the ratios are 0.11, 23.14 and 20.09
respectively.

CHART-12
CHART SHOWING NON-INTEREST TO WORKING FUND RATIO
INTERPRETATION :
The above chart shows that Non-Interest income to Working Fund

Ratio in which it is indicating that the income is in-efficiently used in the
year 2008 which went improving further.
Return on Total Assets:

Net Profit
Return on Total Assets = x 100
Total Assets
TABLE-13
TABLE SHOWING RETURN ON TOTAL ASSETS

(Rs in Lakhs)
Particulars Return on Total

NET PROFIT TOTAL ASSETS Assets
2014 -44.38 14560.71 -0.003047928
2015 3.67 16904.72 0.000217099
2016 387.58 27879.68 0.013901881
INTERPRETTION:
The above table shows return on total assets for three years.
It has got improve from year to year.

CHART-13
CHART SHOWING RETURN ON TOTAL ASSETS
INTERPRETATION :
As proper action was taken by the bank the losses were recovered to an
extent and hence the net profit has got improved.

TABLE-14
TABLE SHOWING SHAREHOLDERS FUND TO WOKING
FUND RATIO
(Rs in Lakhs)
Particulars Shareholder Working fund Ratio
Fund
2014 1577.9 6159.46 0.256175054
2015 1854 9673.09 0.191665745
2016 2001.64 9908.71 0.202008132
ANALYSIS:
The above table has shown the relationship between shareholders fund to
working fund ratio, which has improved from time to time.
CHART-14
CHART SHOWING SHAREHOLDERS FUND TO WORKING
FUND RATIO:

INTERPRETATION:
The above chart indicates that both shareholders fund and working funds
are efficiently made use in the regular banking activities.

Fixed Assets to Working Fund Ratio:
Fixed Assets to Working Fund

Working Fund = x 100
Ratio Fixed Assets
TABLE-15
TABLE SHOWING FIXED ASSETS TO WORKING FUND RATIO
(Rs in Lakhs)
Particulars FIXED ASSETS Working fund RATIO

2014 788.09 6159.46 0.127947905
2015 926.09 9673.09 0.095738797
2016 891.04 9908.71 0.089924925
ANALYSIS:
The above table shows the relationship between fixed assets and
working funds. The ratio has improved from year to year i.e. in years
2014, 2015 and 2016 the ratios were 16530.97, 22938.86 and 25734.54
respectively.
CHART-15

CHART SHOWING RELATIONSHIP BETWEEN FIXED ASSETS

TO WORKING FUND RATIO:
INTERPRETATION:
The above chart implies that the bank is efficiently maintaining good
relationship between fixed assets and working funds.

Investment to working Fund Ratio:
Investment to Working Fund

Working Fund = x 100
Ratio Investment

SUMMARY OF FINDINGS AND CONCLUSION
The liquid ratio of the bank is very much satisfactory that is

higher than the standard 1:1 ratio in the year 2014 and 2015, but in
the year 2016 it is as per the standards.
The cash ratio shows the relationship between cash and

current liabilities but the cash is not sufficient to discharge the
current liabilities.
The reserves of the bank are not sufficient to over- come the
losses suffered.
The bank has suffered continuously loss for two years that is
2010-11 and 2014-12 and then it was recovered to an extent in
2015-13 by earning profit of 691.47.
In the year 2014 and 2015 the current ratio is satisfactory when
compared to idle ratio declared by experts, but in the year 2016
again it has lost its standard that is 2:1.
The bank is mainly depending on the large amount of debt

where as share holders funds are also increasing from year to year
but not to that extent to meet the debt.

The relationship between share holders funds and total assets are as
follows:
The total assets of the bank are sufficient enough to repay the
share holders funds. Hence the total assets position is not so bad.
The borrowing of the debt has got increased in the year 2015 by
5.3%, but in the year 2016 it has been decreased by 9.8% where
there is no sufficient debt for investing in the purchase of assets.
The working fund of the bank include the interest income in the
ratio 14.21 in the year 2014, 19.06 in the year 2015 and 13.58 in
the year 2016
The expenditure is more in the bank than that of incomes, hence

it is suffering losses.
The bank deposits should be maximized.
The bank has its own regulations to carry on its transactions.
The recovery of the bank is taking place to an extent in the year

2016 by earning the profit of 691.47 by implementing a proper
action plan.

The deposits of the bank include 4.68% share of current

deposits and 39.90% of savings and 65.41% of fixed and recurring
deposits in the year 2016. It has to increase this as they are lesser
when compared to 2015.
The working funds include the non-interest income along with

interest income.
Total income earned on the funds employed will come into a

view with the calculation of income to working funds ratio.
SUGGESTIONS
Suggestions
Though the Bank is recovering from the losses incurred by it, by undertaking
an effective Action Plan some suggestions can be given:
 Fixed Assets has to be increased in order to improve its Long Term

Solvency Position.

 Reserves and Surplus should be maintained such that it should satisfy

liquidity position or losses.
 The Bank need to improve its debt position since huge percentage of
its income is going towards payment of the interest on debts. Hence if
debt position is improved the company can improve its income level
by paying less interest over debts.
 The interest payment of the Bank is very substantial and the Bank
needs to reduce this by improving its Collection Period.
 Current Assets position should be sufficient to meet the obligation of
Current Liabilities. It indicates that the Bank has good Working
Capital Funds.
 In order to over- come the situation of accumulated losses and to
avoid such losses in future the Bank has to invest in various securities
which will earn income to it.
 Share holders fund has to be fore gone so that the debts are written-
off.
 A proper and regular check is necessary towards accounts maintained
in the Bank.
 An efficient internal re-construction is required.
 The Bank has to improve its Service Profile by offering attractive
schemes to the customers.

BIBILOGRAPHY
1. Management accounting author of this book is M.N.ARORA was
published by Himalaya publishing house on first edition 2007.
2. Business research design author of this book is SATYA PRASAD

was published by Himalaya publication house on first edition 2014.
3. Cost and financial analysis author of this book is JAWAHARLAL was

published by Himalaya publishing house on first edition 2015.
1. Web sites:
: All India banks association.com

: klrdccbl@sanchar.net

APPENDICES AND ANNEXURES

This Part includes:
CONSOLIDATED BALANCE SHEET:

(Rs in Lakhs)
Particulars 2014-15 2015-16 2016-17
Liabilities:
Paid up Capital 794.70 816.02 816.49
Reserves 89.99 89.53 97.05
Long Term Debt 9977.27 10510.31 9474.95
Current 5126.19 5983.46 6460.24
Liabilities
Contra Items 236.44 167.12 4226.30
Total 16224.59 17566.44 21075.03
Assets:
Fixed Assets 75.74 75.74 82.23
Current Assets 12597.75 12602.55 12735.95
Accumulated 3314.66 4721.03 4029.55
Losses
Contra Items 236.44 167.12 4226.30
Total 16224.59 17566.44 21075.03

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WORKING CAPITAL MANAGEMENT IN DCC BANK

Finance is an integral part of the overall management. It draws heavily

A company in a light financial position will of course give more

Dr.AMBEDKAR INSTITUTE OF MANAGEMENT AND STUDIES Page 1

Definition of Business Finance:

1.2 FINANCIAL MANAGEMENT

1.4 DEFINIATION OF FINANCIAL MANAGEMENT:

Dr.AMBEDKAR INSTITUTE OF MANAGEMENT AND STUDIES Page 2

1.4 IMPORTANCE OF FINANCIAL MANAGEMENT:

The management of finance is important for the following reason.

1) It helps the managements and the entrepreneurs in getting are the

2) Its knowledge helps in decision making in especially pertaining to

3) The financial management helps in profit planning capital budgeting

4) It helps firm in optimizing the out from a given input of funds.

5) It helps in allocation of coming between payments to share holders

1.5 OBJECTIVIES OF FINANCIAL MANAGEMENT:

1. To maintenance of adequate liquid assets in the firm:

Dr.AMBEDKAR INSTITUTE OF MANAGEMENT AND STUDIES Page 3

1.5 DEFINIATION AND MEANING OF WORKING CAPITAL:

a) Outstanding factory payments e.g. rent wages, interest and dividend.

Dr.AMBEDKAR INSTITUTE OF MANAGEMENT AND STUDIES Page 4

c) Short-term loans and advances and sundry debtors comprising

The term “working capital” is often referred to “Circulation

1.7 NEED FOR WORKING CAPITAL

Dr.AMBEDKAR INSTITUTE OF MANAGEMENT AND STUDIES Page 5

The need for working capital cannot be over emphasized. Every

1) For the purchase of raw materials, components and spares.

1.8 COMPOSITION OF WORKING CAPITAL:

Dr.AMBEDKAR INSTITUTE OF MANAGEMENT AND STUDIES Page 6

For proper appreciation and understanding of it, a close look at the

Temporary Investments of Surplus Funds

1.9 CONCEPTS OF WORKING CAPITAL:

Dr.AMBEDKAR INSTITUTE OF MANAGEMENT AND STUDIES Page 7

Gross working capital:

It is the amount of funds invested in the various components of

It is the difference between Current assets and Current liabilities the

Permanent working capital:

Permanent or fixed working capital refers to the amounts of

Temporary working capital:

Temporary variables of fluctuating working capital refer to the

Negative working capital:

Dr.AMBEDKAR INSTITUTE OF MANAGEMENT AND STUDIES Page 8

Negative, working capital emerges when current liabilities exceed

Operating cycle is the time duration required to convert sales after

In cash of manufacturing company the operating cycle is the length

 Conversion cash into raw materials.

 Conversion of raw material into working in progress.

 Conversion of working in progress into finished goods.

 Conversion of finished goods into accounts receivables.

 Conversion of accounts receivables into cash.

Dr.AMBEDKAR INSTITUTE OF MANAGEMENT AND STUDIES Page 9

Raw materials Work in progress

1.10 DETERMINATION OF WORKING CAPITAL:

Growth and expansion of business:

Dr.AMBEDKAR INSTITUTE OF MANAGEMENT AND STUDIES Page 10

The growth and expansion of a business affects the working

Credit facilities enjoyed from creditors:

Price level changes:

Dr.AMBEDKAR INSTITUTE OF MANAGEMENT AND STUDIES Page 11

The dividend policy of a company effects its working capital

Taxes imposed by the government affect the working capital of a

A number of industries manufacture and all sell goods only during

1.11 SOURCES OF WORKING CAPITAL: